The South African Competition Tribunal has approved Nestlé’s takeover of Pfizer Nutrition – but only under the condition that the acquired infant formula brands are licensed out and re-branded in South Africa for a period of 10 years.

The Tribunal, which met to discuss the deal last Friday, announced earlier today that it had approved the $11.85bn deal based on recommendations made by the South African Competition Commission.

Under the approval, Nestlé will be required to license out Pfizer infant formula brands in South Africa to an independent licensee who will be under obligation to re-brand the products for the 10-year period.

This re-branding period will be followed by a 10-year ‘black-out’ period during which time Nestlé cannot re-introduce the Pfizer brands in South Africa.

Despite the conditions, Nestlé South Africa has voiced its delight at the decision.

“We are pleased with the outcome and we respect the recommendations of the Tribunal,” said a statement sent to DairyReporter.com.

“Transitional re-branding remedy”

Nestlé is the largest supplier of infant formula products in South Africa. Pfizer is the third largest supplier.

The South African Competition Commission made their recommendations to the Competition Tribunal based on concerns that one company holding such a significant market share would lead to an increase in the price of infant formula in the country.

“The Commission, having assessed the deal, was concerned that the new merged company could significantly increase the price of infant milk formula,” said a statement from the Competition Tribunal.

“In order to alleviate the potential competition concerns without compelling new merged company to sell off the existing Pfizer brand of infant milk formula, the Commission recommended a transitional re-branding remedy.”

“Having considered the views and explanations of the merging parties and the Commission, and having heard the factual and expert witnesses, the Tribunal today approved the merger with the detailed transitional re-branding remedy as a condition. The merger may now be implemented in South Africa,” said a statement from the Competition Tribunal.

The Competition Tribunal added that there will be no job losses in South Africa as a result of the transaction, or the imposed conditions.

Cleared in “majority of markets”

Nestlé’s acquisition of Pfizer Nutrition was filed for approval with regulatory authorities in a total of 15 countries.

Following the decision of the South African Competition Tribunal, the acquisition has been cleared in a total of 11 – including China, India, Ireland, Brazil and Australia.

The Mexican Federal Competition Commission (CFC) is the only authority so far to prohibit the transaction.

Despite awaiting regulatory approval from a number of countries, the $11.85bn deal was completed in December 2012 after it was approved by the “majority of markets involved.”

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The South African Competition Tribunal has approved Nestlé’s takeover of Pfizer Nutrition – but only under the condition that the acquired infant formula brands are licensed out and re-branded in South Africa for a period of 10 years.